The Gujarat High Court, today delivered that the Assessee’s claim towards Stamp Duty expenses incurred by him while entering into a Contract is Eligible for exemption under Income Tax Act.The Division Bench comprising of Justice K.S. Jhaveri and Justice G.R Udhwani allowed the said claim made by the assessee by invalidating the Order of the Appellate Tribunal.
The assessee claimed allowance of Rs.12,28,560/- towards stamp duty expenses actually incurred by the appellant for executing contract with Maharashtra State Road Transport Corporation. The Assessing Officer through his order disallowed the claim. However, the CIT(A) on appeal, allowed the claim. The Revenue preferred appeal against this order in which the Tribunal reversed the decision of Commissioner of Income Tax (Appeals) and restored the disallowance of Rs.12,28,560/- made by the Assessing Officer towards stamp duty expenses incurred by the assessee. Aggrieved by this, the assessee approached the High Court challenging the decision of the Appellate Tribunal.
On behalf of the appellant, it was submitted that the Tribunal has committed an error while setting aside the order of CIT (A). He has taken us through the order of CIT (A), wherein it is observed that the appellant is duty bound to pay stamp duty as per the provisions of Section 34 of the Bombay Stamp Act, 1958. It is observed that the payment of stamp duty is not for business expediency but it is in the nature of a compulsory levy under the Bombay Stamp Act. It is legally settled that accounting practice cannot over rider the provisions of the Income Tax Act, 1961. It is further observed that the stamp duty paid by the appellant during the year under consideration is a compulsory statutory levy and would not restrict the profits of the future years and ordinarily revenue expenditure incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred and it cannot be spread over a number of years.
The Court observed that, the payment of stamp duty is not for business expediency but it is in the nature of a compulsory levy under the Bombay Stamp Act. It is legally settled that accounting practice cannot over rider the provisions of the Income Tax Act, 1961. Stamp duty paid by the appellant during the year under consideration is a compulsory statutory levy and would not restrict the profits of the future years and ordinarily revenue expenditure incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred and it cannot be spread over a number of years.In view of this, the Court allowed the appeal filed by the assessee and decided in favor of them.
Read the full text of the Judgment below.
